Dr. Dre's 'Compton' and the Ramifications of Streaming Exclusives & Holdout

Dr. Dre’s Compton debuted at No. 2 on the Billboard 200 this week, second only to Luke Bryan’s Kill the Lights, but the battle could have been even closer.

For nearly two years now, Billboard has figuring in streaming play to the Billboard 200. Bryan clearly out sold Dre in physical sales and downloads, 320,000 to Dre’s 276,000, and when streaming is factored in, Bryan came in with a total of 345,000 equivalent album sales, while Dre had the equivalent of 295,000 in sales.

But here’s where it gets interesting: While Bryan’s album is available from multiple retailers as both a physical release and download and for streaming on multiple streaming services, for its first two weeks of release Compton is only available as an exclusive for download through iTunes and steaming on Apple Music – the service built on the framework of Beats Music, which Apple acquired when it purchased Beats Audio hardware and the streaming service for a reported $3 billion in May 2014.

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Since its launch on June 30, Apple Music reportedly has already signed on 11 million users – thanks largely to a promotion offering the first three months of service for free – but it still only represents a piece of the streaming business. Spotify has more than 20 million and then there are other services, including Tidal, Pandora, Rhapsody, Rdio, Deezer, and others, all fighting for their piece of the pie.

With 1,500 streams the equivalent of one album sale, it’s hard to say that Dre would have completely closed that gap if Compton was available on every streaming service and physical and digital retailers, but the race would have undoubtedly been more competitive.

“Whenever you’re limiting the reach of your product, it’s going to have some kind of impact,” says Emily White, Billboard’s associate director of charts, social, and streaming.

This is just part of the new world of the music business. In the past, exclusives for consumers usually meant the purchase price of one album, ranging from $9.99 to $20. Still, indie retailers cried foul when a superstar artist released an exclusive through big-box retailers like Wal-Mart or Best Buy, often as a loss-leader to drive in-store traffic, back in the days when physical sales dominated the music businesses. But now, in the age of streaming, the stakes are higher with services hoping an exclusive will prompt consumers to sign on for yearly premium subscriptions, running in the range of $120 a year – at the lowest tier – to up to double that for additional users or premium sound quality offered by Tidal.

With the competition so fierce, streaming services are trying to separate themselves from their rivals by offering exclusives, which might help them gain some new subscribers, but could also backfire on the artists and alienate fans, who may sign on to one service, only to be annoyed when they find a rival has an exclusive from another one of their favorites.

In a sense, the music industry is following a model created by pay TV and video streaming services. “I think the music industry has seen how that kind of catalog fragmentation works for TV and movies and how distributors are able to play services off each other to get better upfront deals, and I think the music industry probably sees this and think we can play all these different streaming services against each other to try to leverage the best deals,” Billboard’s White says.

Yet, record labels and artists may be up for a rude awakening if they try to go this route. “The problem with that, there are very few artists wield the power to alter consumer habits,” White adds. “There are very few artists because their catalog is only on this streaming service that will actually move the needle for subscribers to change their habits and join a particular service. What we’re seeing is most artists don’t have that power. Consumers might be willing to have a Netflix account and Hulu and cable provider as well, they’re willing to split their TV and movie habits between different places to get Orange Is the New Black or all of Seinfeld, I don’t think that most consumers feel that way about music. I think they mostly feel entitled to access whatever they want to, and that’s the biggest danger to catalog fragmentation in music.

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“I want to thank everybody for your love and your texts and your tweets,” Gifford told viewers at the top of the fourth hour. “Just the outpouring has been extraordinary,” she said. “It’s a heck of a way to find out how loved you are. Believe me, my family and I got great strength and comfort from it.”

Gifford went on to explain how her late husband — who spent 12 seasons with the New York Giants, ultimately winning the MVP award in 1956 — grew up in poverty during the Great Depression and never took his eventual success for granted.

“I’m grateful that the Lord took him [instantly], because the only thing that Frank has ever been afraid of his entire life was being a burden to those he loved,” she concluded. “He never wanted to be hooked up to machines. He never wanted to lose his dignifity. I thank the Lord for that, for his grace to us as a family, and I pray his grace to all of you as well.